Ricos’ TICO BULL – If you are thinking about renting a car in Costa Rica for your visit, there is something you need know, the taxes on your car rental.
Renting a car in Costa Rica is pretty straight forward, you go online and make a reservation at your favorite rental or search for the best rates. Either way, a few clicks here and there you have assured that car will be waiting for yo, at the airport or at the hotel, on your arrival.
Car rentals in Costa Rica are much higher that in the United States. The basic car rental rate are pretty competitive, what makes car rental expensive in Costa Rica is the mandatory insurance and taxes.
For example, using Enterprise.com as a bench mark, a Fullsize SUV automatic, Totota Fortuner, for a week (September 10 to 17, 2019) is US$196; a Ford Edge at the Miami airport (same dates) is US$199. When you factor in additional costs, save insurance, the rental Costa Rica is US$237.07, while in Miami it comes to US$282.
In Costa Rica, despite the Enterprise.com website allowing you to make the reservation without insurance, at the counter, the contract will at the mandator US$17.95 per day for ‘third party liability’. Many an argument have been had over this. But…if you want the car you need to pay the insurance, is the last words before you either sign or walk away.
But that is not the point of this story, rather it is the tax or better yet, the double taxation on car rentals from either the San Jose (SJO) or Liberia (LIR) airports.
Prior to the Value Added Tax (VAT) – Impuesto de Valor Agregado (IVA) in Spanish – renting at the airport added the 13% sales tax, a tax that was not charged at other locations. Important to note that only the major car rental companies have a counter at the San Jose airport, yet renting from ‘an airport’ office, to the best of my knowledge, added the tax in any event.
For example, renting from Enterprise at the airport or main offices in Belen, the 13% tax was added. The same rental at say the Lindora, Santa Ana office, no tax. Renting from smaller operators with no counter at the airport, but a location deemed to serve the airport tourism, the tax was added.
That was before the VAT and we locals all knew that. Tourists didn’t. It really didn’t matter. The ‘airport’ satellite office always charged the tax. Again, that was before the VAT.
With the VAT, the 13% sales tax is not called the “airport fee”. A new name, same tax. Then the 13% VAT is added.
But what takes the cake is that the tax is on the tax. So, if you quickly assumed the total tax payable on your rental would be 26% (13% + 13%), you would be wrong.
Using the Entereprise.com example from above, the Fortuner rental at the airport comes to US$265. And that is pre-insurance.
- The base rent for one week (7 days, Sept. 10 to Sept 17) US$196.50. This applies to all locations.
- There is an environmental fee of US$2.80. This applies to all locations.
- The license plate fee is US$1.50 per day, total of US$10.50. This applies to all locations.
- There is the airport fee of 13%: US$25.55. This applies only to the airport and Belen rentals.
- And the 13% VAT tax: US$30.60. This applies to all locations.
Did you catch it? The 13% VAT is much higher than the 13% sales tax, sorry, airport fee. Why?
The VAT is applied to the rental, services (environment and license plate fees) AND the 13% airport fee. A tax on tax.
The same applies to all the other car rentals servicing the airport, though most do not spell it out like Enterprise.com, the tourist has no idea of the double taxation AND the tax on tax. And like in the case of Enterprise, they changed the ‘sales tax’ to ‘airport fee’.
I am not picking on Enterprise or any other other car rental, they are following the rules of taxation set out by the Ministerio de Hacienda (Ministry of Finance), which in my humble opinion seems to be working hard at finding ways to kill the goose that lays the golden egg (tourism).
I ask, how many feathers you can this government pluck from goose before the goose fights back?
I am not advocating an uprising, no, no, no…but…here is a way of beating the system.
Though when reserving a car for an airport pickup, the car is not actually at the airport. It is close by. In some cases, even further than your hotel. In the case of Enterprise, National, Alamo and Avis, for example, you are closed to the Marriott hotel than your car rental.
The same in Liberia.
Reserving at the airport meams you will be transferred to the car rental office, get caught up in the traffic, etc, and still pay the tax, since the rental is attached to the airport pickup.
So, you didn’t hear it here (you read it), but you can save the airport fee (13% tax) and the tax on the tax by making your reservation for Belen (as in the case of Enterprise, National, Alamo and Avis that are associated to the airport) get to your hotel and then visit the car rental office and tell the counter personnel you came from your hotel or x destination and the airport fee does not apply to you.
“You may get some resistance, but hold firm and threatne to walk away and you will get the charge dropped,” is the advice from my contact the ANC Group that own the franchise for Enterprise, National, Alamo in Costa Rica.
Following are screen captures of Enterprise.com reservations, the only that breaks down all the costs up front.